Silver Market Morning

Gold Today – The gold price closed at $1,294.10 down $12.60 on Tuesday in New York. In Asia and early London, prices again began to recover rising to $1,298 ahead of London’s opening. The gold price was Fixed at $1,297.50 down $14.50 and in the euro at €958.130 down €7.073, while the euro was weaker at $1.3542 and still falling. Ahead of New York’s opening, gold was trading at $1,298.20 and in the euro at €959.43.

Silver Today – The silver price closed in New York at $20.71 down 21 cents. Ahead of New York’s opening it was trading at $20.74.

Gold _{(very short-term)} We expect gold to consolidate in New York today.

Silver _{(very short-term)} We expect silver to consolidate in New York today.

Price Drivers

There were no sales or purchases into the SPDR gold ETF or the Gold Trust on Tuesday. The holdings of the gold ETFs stand at 808.728 tonnes in the SPDR gold ETF and at 165.06 tonnes in the Gold Trust. If the gold price now consolidates we should see more buying into these funds.

Once again speculators piled into COMEX futures on the short side dumping another 17,000 contracts [equivalent of 52 tonnes] in quick time. This knocked the gold price back to the day’s closing low. We reiterate that this is not physical selling of gold. In this case it was accompanied by a falling euro [more than a rising dollar] which currently stands at $1.3538 down from $1.36 after Fed Chairwoman Janet Yellen’s testimony before Congress. There she outlined the flexibility that the Fed has both in raising rates higher if necessary and holding them back if the date warranted it. This was interpreted by the markets as rates are going higher sooner than expected. Consequently, there was a flight from the euro to the dollar [likely by the ‘carry’ trade]. Once again the markets are making markets frothy with speculation, so we wait to see the strength of support for gold.

There is always a danger that much more is read into market moves than should be. Developed world markets do have the power to bring volatility to prices, as we have heard extensively from reports of High Frequency Trading. We believe they bring volatility not liquidity. Netting out positions quickly usually represents [as in this case] volume trades which evaporate in the face of physical demand and supply. So COMEX is ‘full of sound and fury’ but what does it really signify? We warn our subscribers that they should see through spin, noise and distorted emphasis and keep their eyes on the underlying physical action. This is still fairly thin, but tipped towards demand dominance. This is the underlying current in the market and will win out. [Subscribe www.GoldForecaster.com – ensure your gold will not be confiscated and you not penalized -see www.Stockbridgemgmt.com ].

Growth in China has returned to 7.5% to the surprise on many. This is a remarkable testament to the control that government has over its economy and shows governments can spur growth. Contrast that to the West and we see those governments failing on this front.

Silver– Silver will consolidate then recover with gold, we believe. [www.SilverForecaster.com]

Regards,

Julian D.W. Phillips for the Gold & Silver Forecasters